Telecom Italia buys AOL Germany

Telecom Italia is to acquire the Internet-access business of AOL in Germany for €675m. The companies expect to complete the transaction in four to six months, after receiving the customary regulatory approvals.

Earlier this year parent company Time Warner hired Citigroup to explore the sale or restructuring of its entire AOL Europe unit, which also includes the CompuServe brand.

However, Telecom Italia wasn't among the potential take-over candidates rumored earlier this year. Those included Spanish telecommunications group Telefonica and Vodafone subsidiary Arcor. Telecom Italia says it is moving to consolidate its presence in Germany, which started with its acquisition of Hansenet in 2003.

The company says it is already a European leader in broadband Internet access. With its presence in Italy, France and Germany as well as its pending acquisition of AOL Germany’s Internet access business, it will serve approximately 9 million broadband subscribers in Europe.

The German subsidiary is by far AOL's biggest: it boasts over one million DSL users, but until recently lacked investment to compete with its major rival Deutsche Telekom. Germany is seeing fast-growing demand for broadband Internet access with over 22 million ADSL subscribers expected by 2009.®